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Tariff uncertainty took a toll on Raymond James in the fiscal second quarter, the banks' revenue falling short of analyst expectations, dragged down by a month-over-month decline in the business's capital markets unit as tariff uncertainty weighed on investment banking activity. Joining us now to discuss the quarter in an exclusive interview, Paul Shookery, he's the CEO of Raymond James speaking with us for the first time since taking the helm. Paul, it's great to speak with you. Appreciate you making the time for Yahoo Finance. I want to start on your outlook for this economy. What inning would you say we're in in terms of the economic turmoil right now? How would you characterize consumers based on activity that you are seeing?

Great to be here, Madison. I would say as far as the economy goes, a lot of the fundamentals of the economy are strong. You know, unemployment is still relatively low, uh, and the job market is strong, uh, but there has been near term a lot of uncertainty around the trade and tariff negotiations and I think the the answer to how this impacts the economy is really uh, going to be uh, answered by how quickly these tariff negotiations and the uncertainty around those negotiations get settled out. It sounds like uh, the Trump administration is looking to de-escalate, I think which would be welcomed by the economy uh, and by the markets as well.

It seems like some of that uncertainty, Paul, and thanks for joining us this morning. It seems like that uncertainty has impacted near-term deal making, which was what CEOs were were so excited about. It seemed like coming off of the election that it would be in a more favorable environment for deal making. That's not the case right now because they're just trying to focus in on running their businesses. I wonder how you're kind of continuing to converse with some of and and getting kind of the pulse of those same CEOs who are trying to figure out both running their business in this environment, but also making sure that they're kind of keeping a few of the, you know, uh, irons in the kiln if you, however you want to kind of think about keeping it on the burner for some of those conversations.

You're exactly right, Brad. Uh, just a couple months ago, the the pipelines and the outlook for investment banking across the industry uh, was very strong. Uh, and and and really the pipelines continue to build. I mean, just last week I spoke to a CEO who was looking to transact uh, and we actually signed up uh, an engagement with that uh, company. Uh, and they're waiting on the sidelines. There's a lot of pent-up demand after two years of very little M&A activity across the industry after rates started rising following COVID, uh, and there's motivated buyers and sellers, particularly financial sponsors, uh, who have portfolio companies that are well past their initial hold periods, uh, or buyers who have capital that they need to deploy. So I think again, once there's more certainty, uh, there's a lot of potential. Our pipelines at Raymond James Investment Bank are very strong, but we do need more certainty uh, for those deals to get done because in this environment it's very hard for, whether it's a CEO of a strategic buyer or seller or a financial sponsor, to make big bets when day-to-day the markets are going up or down 1,000 points and tariffs are changing dramatically day-to-day. It's just hard to make big bets given the level of uncertainty that they're dealing with.

And I hear you saying the pipeline is robust, but you got to have those those closings at a certain point, Paul. To what extent are you concerned that these tariffs and the negotiations are a story that is going to continue perhaps for the rest of this year or potentially even longer given that we have China this morning throwing cold water on the idea of any negotiations?

Yeah, I mean, that is the key question, Madison, is is when uh, do we get more certainty around these tariffs. I mean, I can't tell you, no one can tell you in the next week whether or not within 100 percentage points where the tariffs with China will be, for example. I mean, that's a pretty dramatic range and has pretty significant impacts to the the markets and the economy and the ability to make decisions uh, as a CEO or a financial sponsor client. So, um, I think it's just a matter of how quickly we can de-escalate these tariff negotiations and get more certainty.

And I also want to talk about corporate loan demand. That was weak for the quarter and that came before Liberation Day impacts, of course. How worried are you that the uncertainty bringing that trickle down in on corporate loan demand could lead to a grinding halt in quarters to come?

Yeah, corporate loans are a relatively small part of our portfolio, but a lot of that is associated with M&A activity. So I think my comments would be consistent there. What we have seen grow is securities-based loans to our private client group clients and I think clients have gotten used to the the new level of short-term rates which drive those borrowing costs and after two years of really paying down those borrowings, they're re-engaging and borrowing and so we have seen healthy loan growth in securities-based loans.

Yeah, do want to put some more numbers on that too as we're thinking about the client assets under administration in this most recent report, 1 and a half, 1.54 trillion dollars to be exact. Don't want to shave any of that success off of the business, of course. And then the private client group assets and fee-based accounts, $872.8 billion. Those were up 6% and 9% respectively over March of last year. I wonder though, in this environment, because it is different from March of last year, how you're seeing some of the wealthier clients that you manage assets for navigate, move assets around in this environment to try and kind of mitigate some of their exposure to current market volatility.

Yeah, I mean, just last week I was with an advisor uh, and their client who had several hundred million dollars of investable assets and uh, to your point, Brad, there's a lot of uncertainty that the client was expressing in the meeting. Uh, but the financial advisor, uh, and this is uh, you know, we're a financial planning oriented firm and the financial advisor told the client, we're not trying to time the markets day-to-day or week to week or even month to month. We we have a long-term financial plan that's set for the next five and 10 years and beyond. Uh, and that plan is working and there's a lot of rebalancing actually in this type of market environment to keep the plan aligned with the objectives of the client and the clients have liquidity to sort of weather the storm near term or the uncertainty near term. Uh, and so, you know, as a financial planning oriented firm, it's these type of environments which really highlight the value of having a financial advisor to help you navigate this period of uncertainty.

Paul, many of us are old enough to remember that before all of this market volatility, we probably would have been asking you about how artificial intelligence and Gen AI might be playing a role in the future of Raymond James, especially when you think about that advisor relationship. Is that something that's being prioritized at all? How do you kind of work across some of the new technology to to make sure that you are advising clients in a capacity that continues to make sure that their wealth is secure at a time when, you know, they're otherwise concerned?

You're absolutely right, Brad. One of the first things I did when I became CEO a couple months ago was announce and newly and fill a new position called the chief AI officer. Uh, and he and his team are fully dedicated to evaluating changes in AI, the models, the use cases, the vendors that are providing services, and how we can use at Raymond James that technology to better enable financial professionals to provide better and more efficient and effective service to their clients. And so right now, our focus on AI is to provide data-driven insights to those financial professionals to increase our already high service levels. Just this quarter, we won number one in JD Power for investor satisfaction of any firm that has advisors. And more importantly, we won number one in the industry trust category as well. But AI can better support financial professionals in providing service to their clients. And then also, of course, security and infrastructure of the company. AI is so important in ensuring that we have a secure environment for all the client information that we we maintain.